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Too Legit To Quit

Black Market Pot After Legalization

After the fireworks, there’s still the smoke. The legalization of retail weed in Oregon — a real Fourth of July moment for potheads — has left in its wake an enduring fug of legal, political and commercial questions that can make prohibition look like a cheerful stroll to the neighborhood dealer in comparison.

One of the major selling points for going legal, at least from the legislative standpoint, was the notion that hauling weed aboveboard would put the screws to the black market, eventually paralyzing all the criminal shenanigans that come with the illegal distribution of drugs. According to this argument, the commodification and careful regulation of marijuana would starve out the underground, taking pot off the streets and out of the hands of thugs, gangbangers and evil cartels.

Like so many issues surrounding weed in Oregon, the impact of legalization on the so-called black market remains to be seen. It’s complicated. A causal survey of smokers in Eugene revealed to EW that many people are indeed now buying their smoke at dispensaries — surprising, perhaps, because the general sentiment prior to legalization was that underground weed would remain cheaper and better, keeping most established smokers tapping the black market.

As someone who’s spent half her life in the underground marijuana industry, Bronwynn Dean says the idea that legalization will wipe out the black market is absurd. Dean, a Eugene writer (and occasional EW contributor) currently penning a collection of essays about her weed experiences, says an industry that’s existed for decades won’t simply go away because the product is now being taxed and stamped for stores.

“I’m talking about the guys that are moving multiple pounds on the regular,” she explains. “I’m not talking about the dime bag. The guys that started growing 20 years ago got into it for a reason, and whatever reason that may be, it definitely has nothing to do with wanting to comply with authority.”

The previously existing underground market is alive and well, Dean says, and she makes the important distinction between illicit dealers and folks producing and moving large quantities of weed. “None of them are ready to sign up to get their shit tagged and searched and all of the above. That’s not why they do it.”

Dean explains that the cost alone of going legit is prohibitive to this “good-old-boy network” of growers who have been producing quality weed for a long, long time. “I do know some major players who considered the cost of licensing and all the shit they have to jump through,” she says of the process of going retail. “The cost alone, it’s designed to drive down their profit and they’re going to have to cut costs, and the shit’s not going to be as good.”

What’s more, she says, most of the marijuana grown in Oregon is being sent out of state. “I would say that 90 percent of what’s being grown here is getting shipped,” Dean says.

Adam Jacques of Oregon Microgrowers Guild echoes Dean’s sentiments. Jacques, an award-winning medical pot grower who will soon open a dispensary in Eugene, says that so long as retail pot remains illegal at the federal level as well as in most states, the black market will continue to exist. “Nationally, the black market’s going to be a thing for a while,” he explains. “There are always going to be states that require a large amount of cannabis that takes care of the people in that state who want cannabis. Weed from here goes everywhere.”

As a medical marijuana provider who’s also entering the retail market, Jacques points out that he’s meticulous in following the legal requirements, down to counting every seed he produces and installing fencing and surveillance cameras. “There’s no way that anybody who’s working the regulatory system can get away with illegally selling stuff,” he explains.

That said, Jacques says he believes everyone from consumers to growers and distributors will continue to move weed on the down low. “I don’t think you’re going to stop the black market growers from growing. They’ve been doing it so far and haven’t gotten caught,” he says, adding that buyers as well will “continue to use their same channels — one, it’s cheaper, and you’ve been smoking that weed for the past 20 years.”

Not necessarily so, says Mark A. R. Kleiman, professor of public policy at New York University's Marron’s Institute of Urban Management. Kleiman, one of the nation’s leading experts on the impact of legalization and co-author of the book Marijuana Legalization: What Everyone Needs to Know, says that when it comes to legalization and the black market, it helps to take the long view.

“The black market’s not going to disappear the day after legalization, and it’s not going to exist five years later,” he says. He points out that in states that have had “wide-open medical marijuana” such as California, “you already had the black market eaten away.”

Other factors eroding the black market, Kleiman says, are the increased productivity of higher quality bud allowed by legal grows, which removes shortages in supply that states like Oregon and Colorado suffered after pot first went legal. Also, he adds, “as illegal production and retailing capacity comes on line, prices fall.”

When it comes to legal weed and the black market, Kleiman suggests drawing comparisons with the end of alcohol prohibition, and how that played out over time. “There’s no moonshining,” he says, “and it’s not because we do enforcement.” Market factors are at work here: First, it’s cheaper to make booze in breweries. There’s also the issue of branding.

“If people’s identity is bound up in the fact that they drink Coors instead of Bud, moonshining’s sort of irrelevant,” Kleiman says. “If the cannabis industry generates brands, they create a generation of consumers.” And, like drinkers, weed smokers will have a choice among a wide range of marijuana in terms of price, quality and quantity. For instance, Kleiman points out Uncle Ike’s in Colorado, which offers a strong budget bud at $95 an ounce — essentially, the malt liquor of weed.

 “The budget bud is all outdoor grow,” he says. “That’s going to squeeze the market pretty hard. The illicit dealers are basically whistling in the graveyard.”

On the legal side, Kleiman says, the idea that legalization would get law enforcement out of the criminal market is “backwards” in terms of what it will take to eliminate the black market. “If there are parallel licit and illicit markets, then arresting illegal dealers is exactly how you grow the legal market,” he says. “The illicit cannabis market is a paper tiger, but it won’t fall over unless somebody pushes.”

Overall, Kleiman says that “the illicit market is a transitional phenomenon,” though so long as legalization remains a changing reality from state to state — federally, weed is scheduled alongside heroin as a criminal substance  — the black market in interstate trade will exist. “There’s nothing about legalization that changes that,” he says. “My guess is that most of the Oregon-grown was going out of state to start with, and that won’t change at all.”